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Bankruptcy Lawyer Bryan W. Stone answers the question: “What are the pros and cons of bankruptcy?”

Though many people may not be aware of it, the debt collection industry has exploded in recent years. In the past five to 10 years, creditors have begun selling all their old debt to debt buying firms, usually for two or three cents on the dollar. These firms then use aggressive tactics to pry money from debtors, even in cases where the debts are expired and legal claims can no longer be made to recover the money. The industry has grown to more than $13 billion in size, representing many thousands of claims against many thousands of debtors.

One of the most important aspects of the bankruptcy process, at least for those eager to end the harassing calls from collectors, is the automatic stay. The automatic stay serves as an immediate (though temporary) stop to the vast majority of debt collections. Though the automatic stay is powerful and can be a welcome relief to many bankruptcy filers, there are limits to what it can do. To find out more about the automatic stay, keep reading.

Humberto Soto thought the $6,411 Chase credit card debt he incurred before his 2012 bankruptcy had been discharged, but when the 51-year-old former hospital worker tried to rent an apartment in January, a housing agency ran his credit and spotted the debt.

Soto called JPMorgan Chase, who held the debt. Chase told Soto he either had to pay or else lose the apartment. Soto called his lawyer, who called the housing agency. Soto got the apartment, and he did not have to pay Chase.

Soto’s experience is playing out by the thousand across the United States, with large financial institutions failing to extinguish debts that federal judges have ordered discharged in bankruptcy courts. By keeping the debts alive, banks are “essentially forcing borrowers to make payments on bills that they do not legally owe,” according to the New York Times. The Times calls the not-dead-yet debts “zombie” debts.

The banks say they comply with all federal laws regarding debt collection and sale of debt holdings, but lawyers in the United States Trustee Program are investigating Chase, Bank of America, Citigroup and General Electric’s financing arm, alleging that the institutions are effectively holding consumer credit reports hostage until borrowers pay—even borrowers whose debts have been discharged through bankruptcy.

Charlotte Bankruptcy Lawyer Bryan W. Stone of Arnold & Smith, PLLC answers the question “What is a small business bankruptcy?”

The craziness in Washington, D.C. is heating up, as one party has foisted onto the floor of the House of Representatives a bill that will be considered under rules suspension. That means the bill will not be amended and will be subject to limited debate.

It is not what you might imagine, however, and far from the advertised “gridlock” that is supposed to have been ensuing in the nation’s capital. The Financial Institution Bankruptcy Act actually enjoys broad, bipartisan support and is co-sponsored by powerful members of both predominant political parties, including Reps. Spencer Bachus (R., Ala.), John Conyers (D., Mich.), and Bob Goodlatte (R., Va.).

Many critics of the 2010 Dodd-Frank Act complained that it enshrined in law the kind of taxpayer bailouts of large companies and financial institutions that were employed on an emergency basis during the Great Recession. The new Act creates a new section of the bankruptcy code, which vests in the bankruptcy courts the authority to oversee bankruptcies involving large financial firms. This authority would appear to supplant the “orderly liquidation authority” created by the Dodd-Frank Act, which critics said enabled bureaucrats to pick and choose among creditors.

The new Act, however, does not eliminate or sap power from the “orderly liquidation authority.”

Yet another solar energy company subsidized by American taxpayers during the effort to save the United States’ economy from ruin has declared bankruptcy.

United States Representative Marcy Kaptur, a Democrat who represents Ohio’s 9th congressional district, helped secure nearly $3 million in federal earmarks for the bankrupt company, Xunlight Corp. In 2010, the company received $34.5 million in tax credits as a part of the so-called federal “stimulus” bill.

The “stimulus” was passed in February 2009 in response to the onset of the Great Recession in order to save jobs and prevent further economic damage caused by the recession, which officially ended later that year. Since that time, the Obama Administration and numerous members of Congress have been criticized for securing billions of dollars in aid and tax credits for companies that subsequently when bankrupt.

A number of the bankruptcies involved solar-energy companies like Xunlight.

Taxpayers aren’t the only ones feeling stung by the latest solar-energy investment bust. In 2008, the University of Toledo Foundation invested $3 million in Xunlight. It ultimately had to forgive $1 million of Xunlight’s debt and received an ownership stake in one of the company’s manufacturing lines instead.

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